New Delhi: India believes China's growing IT sector presents more of an opportunity than a threat to its vibrant software exports, but the long-term challenge from its giant neighbour is one Indians can only ignore at their peril.

The National Association of Software and Service Companies (NASSCOM), which flew a top-level team to China last month to assess the competition there, said its findings were cause for optimism, at least in the short term.

"China does not pose an immediate threat to the Indian software and service industry as China's software industry is currently very focused on catering to its domestic IT market," NASSCOM chairman Phiroz Vandrewala said.

Vandrewala pointed out that the average wage costs in China were 15 to 20 per cent higher, while the Indian market was ahead in quality certification and project management skills.

"China's burgeoning domestic IT market and its entry into World Trade Organisation (WTO) offers great opportunities for Indian IT companies to enter into joint ventures with Chinese IT companies," he added.

The sectors identified by the NASSCOM team as those for Indian firms to look for include banking, securities trading, telecommunications, power and various utility services.

"This will also provide an opportunity to serve multinational company customers of Indian companies who are already operating in the Chinese IT market," Vandrewala said.

However, despite India's advantage of a bigger talent pool, China has a strong competitive advantage in the vast infrastructure including telecommunications and the number of personal computers, NASSCOM said.

The number of personal computers in China is 16.3 million, compared to only 6.4 million in India.

Similarly, China has almost triple the number of internet users at around 30 million.

Cellular phone subscribers in China total 165 million, compared to India's six million, and it is also way ahead in the number of fixed line connections and high bandwidth capacity.

"The main threat to Indian software would lie in ignoring China. The economy is so big and powerful, nobody can afford to do that," NASSCOM vice-president Sunil Mehta said, adding that Indian software firms needed to draw up a well thought-out entry strategy for the Chinese market.

NASSCOM's Vandrewala said the infrastructure capacity obviously gave a tremendous depth for China's future growth in IT software exports.

"China's software industry will grow very rapidly. There is no doubt about it," he said, adding the Chinese government was paying a lot of attention to nurturing the sector.

He said Indian IT firms might find it difficult to reap quick profits by tapping into the Chinese market, but added the inherent advantages in forging long-term ties were many as it would provide a synergy of Chinese hardware and Indian software skills.